These days, your credit score means more than whether or not you can finance your dream home or new car. Landlords and employers have begun to look at credit scores as a way to make decisions on future tenants or employees. For these reasons and more, building good credit matters more than ever. You can’t build a good credit history if you never use credit. While a cash-only lifestyle may keep you out of debt, it won’t help you generate a credit score that lenders need when you apply for a loan. It’s therefore a good idea to secure one major credit card and use it from time to time.
Paying your bills on time each month is another way to establish good credit. While prompt payment won’t raise your scores dramatically, a few late payments can have immediate repercussions. With today’s hectic lifestyles, it’s always possible to simply forget about a bill. Setting up automatic payment for your household bills is one way to ensure that your bills get paid on time. You just have to be sure that you keep enough funds in your account to cover the bills.
If you carry a credit card balance, then it’s also a good idea to pay more than the minimum payments. When you consider interest charges, minimum payments will cost you more of your hard-earned money in the long run. Pay down your balances as much as you can afford, and your credit score will thank you. A card that is constantly maxed out is like a bomb just waiting for the right trigger.
Sometimes your credit history takes a hit through no fault of your own. A mistake by a bank or one of the reporting agencies can put a bad mark on your credit history that you don’t deserve. That’s why it’s important to keep a close watch on your scores. Many banks will send you regular copies of your credit report for a nominal fee.
Building good credit is all about making smart decisions. Don’t buy things you can’t afford, and pay your bills religiously, and you’re well on your way to rock-solid credit
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